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Hukou Reform: a Modest Start

Ok, it's here, the moment we've all been waiting for: China's hukou reform. Yes, the Chinese government is finally letting go of some of the much-discussed, much-criticized, yet still very-much-in-force remnant of Socialism that still defines Chinese life: the household registration system. Well..not so fast.

Yesterday, the Chinese government announced with full official fanfare complete with a press conference and footage of serious-looking reporters, that there would "no longer be any distinction between urban and rural." But this is a more symbolic move than anything. While it does mark the start of a process that will likely be long and gradual, its important to note what is not changing — at least not yet.

A hukou, or residence permit, is the identity card that every Chinese citizen has. It separates urban from rural residents, so that rural migrant workers in China's cities are still officially classed according to where they were born or first registered as a child, not where they live. This means they cannot access social services like healthcare, education and other social welfare benefits even if they have lived and worked in a city like Beijing for many years.

The new policy will gradually break down these barriers: allowing those who already have jobs and have been living in cities other than where they are registered to become official "urban residents". In the major cities like Beijing and Shanghai, this would mean that higher skilled workers will be able to become permanent residents of their city. But this has already been the case for many graduates of elite universities and employees at important state firms.

Which "megacities" ?

The key advancement announced is to allow rural residents to begin to become legal residents in towns, small cities under 1 million in population, gradually ease restrictions in medium-sized cities between 1 and 3 million, yet continue to restrict population in so-called megacities over 5 million. But let's look at just how many cities would qualify for that distinction as shown in the map below — and crucially, this map shows cities with an urban population of 5 million or more — the narrowest definition possible of what is a city in China.

By this map, it's not just Shanghai and Beijing that are going to be more or less off-limits to all but the most elite of migrants (those with college degrees and other assets). It's actually almost every important city in China, from the big 3 metropolises on the coast (Beijing, Shanghai, Guangzhou) to 2nd tier provincial capitals like Wuhan, Chengdu, Xi'an and Zhengzhou. These are some of the most dynamic cities in western and central China where new jobs are sprouting up.

So what cities exactly can migrants now move to? Likely the "under 1 million" category of cities includes county towns and probably other smaller "prefecture-level" cities. We could take this to mean that rural residents in counties will be able move to the "county-seat" or Xiancheng, with little difficulties. Some of these county towns are indeed booming, and drawing in migrants from their nearby hinterlands. They get much less attention than megacities, but they're still substantial. China's urbanization policies have already been encouraging the relocation of farmers to these sorts of small cities, so in a sense the recent hukou announcement is merely a formalization of trends that have already been going on for some time.

As stated in the recent announcement, this is just a general set of guidelines and as it moves forward it will be implemented on a city-by-city basis, following the pattern of many other large reforms in China such as Deng Xiaoping's gaigekaifeng reform policies of the early 1980s. In fact, certain cities like Chengdu and Chongqing have already begun their own version of rural reform aimed at enabling rural residents in the hinterlands of certain cities to trade in their land and farming use rights in exchange for urban hukou. But, crucially, these are rural residents living within the jurisdictions of large cities like Chengdu and Chongqing, the rural populations of which are substantial.